Day Trading – Real Time Market Updates - 02-26-2015

Proper context can start the day with a solid win and make all the difference.

Enter the Chartroom here (pre-open Market Tour begins at 8:55 ET)

Through the prior close...
Wednesday''s modest gap down probed under the overnight slide down to 2108.75, but didn''t extend it, essentially requiring a retest of Tuesday afternoon''s 2115.75 high. Since Tuesday afternoon''s high had been flawed by failing to hold above the morning''s 2114.25 high, it would be doomed to failure of some sort. In fact, despite probing new highs up to 2117.75, the afternoon''s bias environment was exited back in the noon hour''s 2112.75-2114.75 range, and the final hour was entered below it. The morning''s low was retested down to 2107.25, bouncing to 2112.50 ahead of the close. Overbought RSIs were left outstanding at the high.

Overnight action''s new info...
Firming to within 1 tick of yesterday''s 2114.75 noon hour high was suddenly reversed back down to within 1 tick of the Globex open''s 2109.75 low. The reversal was retraced entirely, back into a 3-hour 2112.75-2114.75 range that just tried breaking 1 point lower.

If, then...
Yesterday afternoon''s plunge has been retraced back to yesterday''s noon hour high, where we expected this morning''s open to print. Of course, the open is another two hours away, with much news coming before then. A retest of yesterday''s high remains likely today so long as the open isn''t reversing yesterday''s late bounce.

First Trade...
Exiting the open at 9:45 above 2117.25 would be likely to trigger the 2115.00 bias-up signal at 10:15. Exiting the open above 2112.75 would be unlikely to trigger the 2106.25 bias-down signal. Bias-down would likely trigger if the open were exited under 2104.25.

A drop this morning by any other name...

The overnight recovery to 2114.75 was trying to defend its 2112.75 support. Then 8:30''s trio of econ reports triggered a drop back down to and through overnight lows to 2108.00.

The pre-open drop wasn''t likely to have changed the narrative. Neither was the post-open drop. Despite only bouncing to 2114.75 and not actually opening there, yesterday''s highs are likely to be retested before a durable downleg begins.

A post-open bounce tested 2111.00. It resolved back down to and through post-open lows, triggering a sell signal that targeted 2104.25. Its test reacted up in time to overlap the 2106.25 bias-down signal at 10:15, invoking the grace period. 

2106.25 was being overlapped again at 10:30, so this is a noN-bias environment. Neither bias parameter is in-play -- not a test of the bias-down target, and not an offsetting test of the bias-up signal.

Meanwhile, a buy signal that had triggered above 2106.50 held its pullback limit, and is now extending higher to 2109.50. A fresh post-open high would all but marginalize sellers (they can''t be marginalized so long as the low''s oversold RSIs remain un-retested).

THU afternoon signal (triggered at 1:20 ET) SPX ES Bias-up: above 2115.75
2113.50
...would target 2121.00
2118.75
Bias-down: under 2110.00
2107.75
...would target 2103.75
2101.50
Signal status: LATE NO-BIAS, TESTED BIAS-DOWN SIGNAL
FAQ INTRO VIDEOS #1 and #2

1. At 1:20, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 1:20 would be "no-bias," and the bias signals should define the bias environment''s range.
-- A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 1:20 would invoke a grace period through 1:30 to trigger a late signal.
-- "Late" signals don''t require testing the opposite bias signal, but it''s still likely.
4. Still testing the bias signal at 1:30 after invoking the grace period would trigger "noN-bias," with no bias influence.

A daily summary of high-profile members of several complexes... View a more detailed discussion of each chart at the end of today''s Market Wrap.

Eurodollar Mar Contract (EC, ETF: (FXE))
Thursday''s opening plunge plunged further into mid-morning. A second consecutive lower close would confirm a new downleg underway. Probing lower intraday and closing positive would enable a bottom to begin forming. But a premature recovery attempt that doesn''t first probe negative territory would not be bullish.

Gold Apr Contract (GC, ETF: (GLD))
Wednesday night''s rally up to 1220.00 wasn''t any likelier than Tuesday''s gap up to extend higher, still being premature for a bottom. The balance of the session did trend back down to 1206.00, where any lower would have put into play 1185.00. Actually testing 1185.00 can''t be discounted, but a test of the 1200.00 area would be credible.

Silver May Contract (SI, ETF: (SLV))
Thursday''s gap up to 16.80 wasn''t any likelier to extend, and in fact only dipped back under Tuesday''s 16.66 prior high, which was also the prior week''s prior highs.

30-year Treasury Mar Contract (US, ETF: (TLT))
The 147-00 bounce target''s upper-end was probed Thursday. Closing higher would have suggested the temporary bounce either will be much greater, or that isn''t temporary, at all. Closing essentially flat requires holding 146-14 as support to maintain the bounce potential.

Crude Oil Apr Contract (CL, ETF: (USO, UWTI))
Wednesday''s surge to attack the 51.25 buy signal needed to extend higher without delay to be credible, preferably gapping up above 52.65. Thursday''s open gapped down. An intraday recovery attempt resolved down to fresh lows at 47.70. A late bounce was resisted by what has been 49.00 support. New lows are in-play unless at least 51.25 were recovered aggressively.

Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Already testing the 2.80 pullback limit ahead of Thursday''s EIA report didn''t prevent extending don to 2.69. The report wasn''t being greeted from a position of strength, but at least a lot of selling pressure had been expended already. So, any indication that the reaction is being rejcted -- e,g, immediately recovering 2.77 Friday morning -- would have potential for extending sharply higher intraday.

If a new high close on Friday can''t be a top... then Friday shouldn''t produce a new high close. Otherwise, the topping pattern we''ve been tracking isn''t valid.

Pattern points... (Setups and technicals)
The topping pattern that was warned Tuesday, and which was confirmed Wednesday, began tipping its hand Thursday. But it was mixed signals that still probably delay a downleg. 

The entire session was spent ranging in negative territory, it probed under prior lows, and it closed negative. That''s "ineffectual pessimism," which often produces at least a temporary rally.

Also Thursday, the afternoon''s bias environment was exited under the noon hours low and the final hour was entered lower. Sellers gained traction, and should be rewarded by spending the morning under Thursday''s lows.

Each is problematic to the other. A fresh low here could extend down much more substantially -- so much for overbought RSIs being retested at Wednesday''s high. Powering higher instead would prevent rewarding Thursday''s sellers.

What''s Next... (Outlook and opportunities)
Thursday''s sellers can be invalidated by maintaining a gap up above Thursday''s highs. Don''t feel sorry for them. They''ll be well rewarded after retesting Wednesday''s high. Otherwise, last week''s "lower prior highs" will be tested next.

FRI morning signal (triggered at 10:15 ET) SPX ES Bias-up: above 2115.00
2112.75
...would target 2120.75
2118.50
Bias-down: under 2104.50
2102.25
...would target 2098.00
2095.50
Signal status: NO-BIAS FAQ INTRO VIDEOS #1 and #2

1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be "no-bias," and the bias signals should define the bias environment''s range.
-- A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
-- "Late" signals don''t require testing the opposite bias signal, but it''s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger "noN-bias," with no bias influence.